SNB published a report on the results of a survey it conducted, in the fourth quarter of 2018, on digitalization and fintech at Swiss banks. The survey focused on financial stability considerations and was intended to gain a perspective on how digitalization is influencing banks operating in the deposits and lending business. Overall, the results of the survey indicate that the banks expect a strong level of digitalization in financial intermediation.
The results of the survey show that banks view digitalization mainly as a source of opportunities, particularly with regard to cutting costs and improving service quality. However, banks also highlighted challenges from increasing competition, both with other banks and with new market participants such as bigtech firms and digital banks. Thus, banks are seeking to achieve ambitious digital maturity targets and are investing in their own innovations or acquiring innovative solutions from specialized firms such as fintechs. Other key findings of the survey are as follows:
- In the longer term, the banks envisage continuing to play a central role in financial intermediation, albeit amid heightened competition and significant digitalization of financial services.
- At the strategic level, the banks are seeking to bring their existing business models to a high level of digital maturity, with the aim of cutting costs and retaining their attractiveness to customers.
- Digitalization strategies vary greatly depending on the size of the bank. The larger banks have set themselves more demanding digitalization targets than their smaller counterparts and have already achieved a higher level of digital maturity.
- Responses on banks differ considerable regarding the usage of digital channels by customers. Customer use of e-banking services is high. However, when it comes to opening a deposit account or establishing a lending relationship, the digital channels are used less frequently.
- The majority of banks regard the regulatory regime in Switzerland to be sufficient and do not see it as a hindrance to further digitalization developments. Banks, however, see a need for action when it comes to the lack of a legal basis for digital identity and the statutory requirement for contracts to be physically signed for certain transactions. This is seen as an obstacle to end-to-end digitalization in various business segments.
The survey is based on a representative sample comprising 34 Swiss banks that are predominantly active in the deposits and lending business. The banks included in the sample make up about 80% of the banking sector assets. As part of its statutory mandate, SNB tracks developments in the digitalization of the financial system, focusing on its implications for the implementation of monetary policy, the operation of cashless payment systems, and the stability of the financial system.
Keywords: Europe, Switzerland, Banking, Fintech, Digitalization, Survey Results, Bigtech, Financial Stability, SNB
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